Judge Rejects Oracle’s Damages Estimate in Google Case

Judge Rejects Oracle’s Damages Estimate in Google Case

A judge rejected Oracle’s billion-dollar damages claim against Google, the latest in a closely-watched patent infringement case that may indicate how vulnerable Google’s mobile OS is to future litigation.

U.S. District Judge William Alsup ruled Friday in San Francisco that Oracle must determine a new damage estimate, down from its $6.1 billion claim, which the Redwood Shores, Calif.-based company originally filed against Google’s Android platform in August. The company then lowered the damages it planned to claim to $2.6 billion at the end of June.

The new estimate should instead start as low as $100 million, according to Alsup — the same figure Sun Microsystems offered Google in 2006, which the search giant declined, to license Java before Oracle acquired Sun.

“The court is strongly of the view that the hypothetical negotiation should take that $100 million offer as the starting point,” Alsup said in his written ruling, which comes after a Thursday hearing in which he chided both companies for being unreasonable in their arguments.

The judge’s rejecting Oracle’s revised damages estimate may significantly alter the scope of the suit, which is part of a larger web of intellectual property litigation in the tech industry. Nearly every major company in the sector is involved in patent-related lawsuits to determine who ultimately owns the software used to power smartphones and tablets.

These suits can have major repercussions on phone makers’ revenues and earnings — Microsoft’s settlement against HTC nets it $5 on each Android handset HTC sells, for instance, although most companies settle with one another for undisclosed sums.

Handset companies that use Google’s Android platform regularly see lawsuits filed against them, partly due to their customizations of Java code and partly because of Google’s relative lack of patents to protect it from litigation. Oracle’s suit against the Mountain View, Calif.-based company is a particularly high-profile case due to its high damages claim, as well as its request for the court to order destruction of all products that violate its Java copyrights.

Google may be particularly vulnerable in the Oracle case. Alsup noted Friday that if a jury rules Android infringed upon Oracle patents, it was “a substantial possibility” Google will be ordered to permanently stop selling any infringing products. With Android present on a wide slate of devices on the market, the possibility may cripple Android’s future growth in mobile markets, where it has made significant gains in market share in recent years.

Recent signs indicate the court found merit in Oracle’s argument that Google knew of its patent violation but went ahead with it anyway. Google earlier also signaled its openness to negotiating a settlement. But Alsup’s request for a new damages claim may slow Oracle’s momentum in the case, tempering the struggling company’s hopes for a huge win.

However, Alsup also left the door open for Oracle to extend the case in order to estimate a fair claim.

“If Oracle needs to postpone the October trial until it settles on which claims it truly believes are triable, then it should bring a prompt motion to do so,” Alsup said.

For its part, Google may attempt to shore up its patent store to better protect Android in the long run. It recently lost out to a consortium of rivals in the much-discussed Nortel patent auction, but is emerging as a competitor for a trove of patents by InterDigital. With cases like Oracle’s being brought against it, the company’s need to bolster its intellectual property has become paramount.

If its case against Android proceeds like others against the OS, Oracle will likely win a settlement against Google. To what extent, though, may indicate just how much companies should expect to gain from such cases in the future.

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